








Class_v 'K 41 

Book_1311 b 



























61 st Congress, j 

SENATE. 

j Document 

3d Session. j 


| No. 859. 


\L%. f 


BUSINESS METHODS IN EXECUTIVE DEPARTMENTS. 


MESSAGE 


FROM THE 

PRESIDENT OF THE UNITED STATES, 

ASKING APPROPRIATION TO CONTINUE INVESTIGATION OF THE 
BUSINESS METHODS EMPLOYED IN THE EXECUTIVE DEPART¬ 
MENTS. 


March 3, 1911. —Read, referred to the Committee on Appropriations, and ordered to 

be printed. 


To the Senate and House of Representatives: 

I ask that you include in the sundry civil bill an appropriation for 
$75,000 and a reappropriation of the unexpended balance of the exist¬ 
ing appropriation to enable me to continue my investigation, by mem¬ 
bers of the departments and by experts, of the business methods now 
employed by the Government with a view to securing greater economy 
and efficiency in the dispatch of Government business. 

The chief difficulty in securing economy and reform is the lack of 
accurate information as to what the money of the Government is 
now spent for. Take the combined statement of the receipts and 
disbursements of the Government for the fiscal year ended June 30, 
1910—a report required by law and the only one purporting to give 
an analytical separation of the expenditures of the Government. 
This shows that the expenditures for salaries for the year 1910 were 
132 millions out of 950 millions. As a matter of fact, thp expenditures 
for personal services during that year were more nearly 400 millions, 
as we have just learned by the inquiry now in progress under the 
authority given me by the last Congress. 

The only balance sheet provided to the administrator or to the 
legislator as a basis for judgment is one which leaves out of consider¬ 
ation all assets other than cash, and all liabilities other than warrants 
outstanding, a part of the trust liabilities, and the public debt. In 
the liabilities no mention is made of about $70,000,000, special and 
trust funds so held. No mention is made of outstanding contracts 
and orders issued as encumbrances on appropriations; of invoices 
which have not been vouchered; of vouchers which have not been 









2 BUSINESS METHODS IN EXECUTIVE DEPARTMENTS^ \j^ 

^ \ 0 \ 

audited. It is, therefore, impossible for the administrator to have 
in mind the maturing obligations to meet which cash must be pro¬ 
vided. There is no means for determining the relation of current 
surplus or deficit. No operation account is kept, and no statement 
of operations is rendered showing the expenses incurred—the actual 
cost of doing business—on the one side, and the revenues accrued, 
on the other. There are no records showing the cost of land, struc¬ 
tures, equipment, or the balance of stores on hand available for 
future use; there is no information coming regularly to the adminis¬ 
trative head of the Government or his advisers advising them as to 
whether sinking-fund requirements have been met, or of the condition 
of trust funds or special funds. 

It has been urged that such information as is above indicated could 
not be obtained for the reason that the accounts were on a cash 
basis; that they provide for reports of receipts and disbursements 
only. But even the accounts and reports of receipts and disburse¬ 
ments are on a basis which makes a true statement of facts impos¬ 
sible. For example, all of the trust receipts and disbursements of 
the Government, other than those relating to currency trusts, are 
reported as “ordinary receipts and disbursements”; the daily as well 
as the monthly and annual statements of disbursements are mainly 
made up from advances to disbursing officers—that is to say, when 
cash is transferred from one officer to another it is considered as spent 
and the disbursement accounts and reports of the Government so 
show them. The only other accounts of expenditures on the books 
of the Treasury are based on audited settlements, most of which are 
months in arrears of actual transactions. As between the record of 
cash advanced to disbursing officers and the accounts showing au¬ 
dited vouchers, there is a current difference of from four hundred 
millions to seven hundred millions of dollars, representing vouchers 
which have not been audited and settled. 

Without going into greater detail, the conditions under which leg¬ 
islators and administrators, both past and present, have been working 
may be summarized as follows: There have been no adequate means pro¬ 
vided whereby either the President or his advisers may act with intelli¬ 
gence on current business before them; there has been no means for 
getting prompt, accurate, and correct information as to results 
obtained; estimates of departmental needs have not been the sub¬ 
ject of thorough analysis and review before submission; budgets of 
receipts and disbursements have been prepared and presented for 
the consideration of Congress in an unscientific and unsystematic 
manner; appropriation bills have been without uniformity or common 
principle governing them; there have been practically no accounts 
showing what the Government owns, and only a partial representa¬ 
tion of what it owes; appropriations have been overencumbered 
without the facts being known; officers of Government have had 
no regular or systematic method of having brought to their attention 
the costs of governmental administration, operation, and mainte¬ 
nance, and therefore could not judge as to the economy or waste; 
there has been inadequate means whereby those who served with 
fidelity and efficiency might make a record of accomplishment and 
be distinguished from those who were inefficient and wasteful; func¬ 
tions and establishments have been duplicated, even multiplied, 
a using conflict and unnecessary expense; lack of full information 


BUSINESS METHODS IN EXECUTIVE DEPARTMENTS. 


3 


has made intelligent direction impossible and cooperation between 
different branches of the service difficult. 

I am bringing to jmur attention this statement of the present lack 
of facility for obtaining prompt, complete, and accurate information, 
in order that Congress may be advised of the conditions which the 
a President’s inquiry into economy and efficiency has found and which 
the administration is seeking to remedy. Investigations of admin- 
. 3 istrative departments by Congress have been many, each with the 
same result. All the conditions above set forth have been repeatedly 
pointed out. Some benefits have accrued by centering public atten¬ 
tion on defects in organization, method, and procedure, but generally 
speaking, however salutary the influence of legislative inquiries (and 
they should at all times be welcome), the installation and execution 
of methods and procedure which will place a premium on economy 
and efficiency and a discount on inefficiency and waste must be care¬ 
fully worked out and introduced by those responsible for the details 
of administration. 

It was with this strong conviction, based on years of observation in 
public service, as well as on analogy found in corporate practice, that 
I asked Congress a year ago for an appropriation of $100,000 to pay 
the expenses of an inquiry into the methods of transacting public 
business, with a view to ‘ ‘ inaugurating new or changing old methods, 
so as to attain greater economy and efficiency.” First of all, this 
inquiry has sought to know what is the problem before each admin¬ 
istrative head, i. e., what are the powers, duties, and limitations 
imposed on each officer; what is the organization and equipment by 
means of which these powers and duties are executed or made effec¬ 
tive; what are the methods and procedure employed; what records 
are kept; what reports have been made. These inquiries have been 
made and the results have been indexed and tabulated and made 
available to the several departmental committees. In the progress 
of the work the estimates for 1912 have been brought together on a 
uniform basis; expenditures have been reclassified and the objects of 
expenditure have been codified; uniform forms of expenditure docu¬ 
ments have been devised and are now being considered for installa¬ 
tion; the auditing organization and procedure are under discussion; 
new forms of expenditure, accounting, and reporting are being 
critically reviewed to the end that a common method and procedure 
may be introduced throughout the service. A general constructive 
program has been mapped out. 

The appropriations asked for will enable the President, as the 
responsible head of the administration, to provide the* means for 
effectively undertaking the revision of administrative methods and 
accounts, so far as lie in his powers, without legislative action. The 
amount asked for was small, because it was expected that as soon as 
a well-supported plan was developed a very large number of highly 
competent technical men might be found in the service who might 
be brought into cooperative relation to make the work of revision 
one of evolution and permanent benefit to the Government. The 
cooperation and the high character of service obtained among regu¬ 
lar employees has even surpassed my hopes. 

Predictions and forecasts of economy are relatively easy to make 
but are seldom of value. It must be admitted, however, by all that 
under such circumstances as have prevailed in the past any well- 



4 


BUSINESS METHODS IN EXECUTIVE DEPARTMENTS. 


directed and well-sustained effort which will cause each branch of the 
service to cooperate in a program of economy and efficiency will each 
year produce results that will mean many times more than the cost. 
If inquiry is accompanied by constructive effort which aims toward 
uniformity of practice, systematic handling of the business will come 
inevitably as a result of greater intelligence of administrative direction 
and control. 

I strongly urge, therefore, that Congress provide the necessary 
funds to carry on this important work. I urge this, not only that the 
President may have before him the information necessary to the intel¬ 
ligent exercise of his present powers, but that he may also lay before 
Congress such recommendations as may be deemed necessary to make 
a well-considered constructive program effective. 

Wm. H. Taft. 

The White House, MarchS, 1911. 


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